Why Good Values make Good Business Sense
Core values are not descriptions of the work we do or the strategies we employ to accomplish our mission. The values underlie our work, how we interact with each other, and which strategies we employ to fulfil our mission, according to John Tschohl, founder of the Service Quality Institute.
Our core values are the basic elements of how we go about our work. They are the practices we use (or should be using) every day in everything we do. So how do the big companies stack up on core values?
Their number one secret weapon is also their number one core value: a service strategy. For example:
- Amazon
"Customer Obsession" - Imagine owning Amazon.com (up over a crazy 4,000% since 2001) - Apple
"Insanely Great Customer Service" - Apple (up over a mindboggling 6,000% since 2004. - Costco
"Take care of our customers" - has averaged an annual gain topping 18% for 30 years. (That's enough to turn a single $1,000 investment into more than $140,000!) - Starbucks
"Creating a culture of warmth and belonging, where everyone is welcome". For the full-year fiscal 2014, Starbucks grew consolidated revenues to a record $16.4 billion, an 11% increase over 2013. - Virgin Group
"Better Service at a lower cost and with a sense of style and fun". Richard Branson may be the richest high school drop-out in history. Another amazingly successful dyslexic.
Most businesses do not understand that customer service is really selling because it inspires customers to return more often and to buy more. Patronage by loyal customers who buy again and again because they like the service yields 65% of a typical organisation's volume, according to a study by the American Management Association.
Studies prove that service actually is more effective in many companies at enhancing volume and profit than marketing, promotion, or advertising. I suspect that in companies with comprehensive, highly professional service strategies, service adds more to their bottom-line results than research and development, product innovation, capital improvements, broad selection, credit services, or any other strategy.
If companies recognise and grasp opportunities as they present themselves they will learn how to deliver value, differentiation, and improvement.
"I'm an ideas guy. I love big ideas. I get a vision for something and I'm obsessed with making it a reality. I've been obsessed with Customer Service for the past 44 years. It's what good business practices is all about," said Tschohl.
It's this obsession with core values and a Service Strategy that the successful companies are committed to. They are obsessed with providing excellent customer service and products. Take Costco for instance. They have been listed as one of the 17 best supermarkets in America. With the normal customer making on average of 83 trips to the supermarket each year, this no-frills warehouse chain took top marks for price satisfaction and store-prepared food.
Service means different things to different people. At the lowest level service is something a customer is not entitled to, but you give to him as a gift. At a somewhat higher level, service means focusing on customer transactions but only fixing something if it is broken. At the highest level, the aim of service is to deliver more that the customer expects. Good service no longer gets you into the game. Only consistent, exceptional service will create loyal customers and keep you in the game.
Naturally, the highest level of customer service is what I obsess about. It's what Apple, Amazon, Costco, Virgin, Starbuck and many others have as their first core value.
"One of my heroes in business is Jeff Bezos. He lives and breathes a service strategy/core value for his company. He took the 'Earth's biggest bookstore' to 'Earth's biggest anything store'," explained Tschohl.
Through each expansion of his company Bezos continually emphasized his six core Values: customer obsession, ownership, bias for action, frugality, high hiring bar, and innovation. Fortune magazine named Bezos its 2012 "Businessperson of the Year".
"When a company makes the momentous discovery that customers are really people and when they give customer service at least as much power and influence over decisions as they give financial considerations, then they are well on the road to achieving a competitive advantage and even market dominance. That means money," concluded Tschohl. "I believe the most effective and profitable business strategy today is a service strategy."
Sources: Service Quality Institute / The Marketing Factbook.
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